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For Prime Minister Cameron Re. LBMA Gold Trading

By: David Jensen | Monday, January 13, 2014

Dear Prime Minister Cameron,

I am writing about gold trading at the London Bullion Market Association (LBMA)
in London which is the preeminent Western gold trading exchange.

The LBMA trades 290 million oz. of gold per day or, by another measure, trades
350% of annual global gold mine production each day.

LBMA gold trading is largely based upon highly leveraged gold instruments
that are only notionally backed by gold but, in reality, these gold instruments
can be created without limit thereby flooding the trading market with
fictitious gold.

Creation of these gold instruments on the LBMA permits its extraordinarily
high daily trading volume of gold that does not exist and allows application
of high frequency algorithm trading which can be used to force down the price
of gold.

The impact of the LBMA's gold trading is that the price of gold can be systematically
manipulated down by the bullion banks that trade on this exchange in their
short term self interest.

In effect, the LBMA with its dominant gold market position exerts price control
on the world physical gold market.

The ultimate result of price controls is that items which have their prices
controlled disappear from the market.

The implications of this price control and disruption of the gold market's
proper function goes well beyond ordinary commodity price manipulation.

Former member of the US Federal Reserve's Board of Governors John Exter ( https://en.wikipedia.org/wiki/John_Exter )
originated the inverted pyramid showing gold being at the core of the financial
system.

Because gold is an asset unto itself (it is nobody's liability) and because
gold lies at the heart of the financial system, the disappearance of gold liquidity
or gold flows due to continued price control will signal financial system crisis
causing a subsequent rush to secure other real assets, disruption of both the
global bond markets and of currency functionality.

Mr. Cameron, you must act quickly to reform the LBMA. Consequences of not
acting are world financial system turmoil.

Individuals worldwide are watching and noting the activities in the UK gold
markets and their consequences to the world's financial system.

Physical gold is, as we speak, being rapidly withdrawn from the financial
system and, because there is limited gold available, you have only a limited
time to act to disallow levered gold instruments and ensure only real trading
of gold on the LBMA so that gold flows are maintained in the financial system.

In 2014, physical gold exchanges are, in addition to the already extant Shanghai
Gold Exchange, scheduled to start trading in Moscow, Dubai, Singapore, Thailand
and South Korea. These markets will provide a further source of demand for
Western gold given continued containment of gold's price and this essential
financial asset will be further stripped from the West's financial markets
and disappear into the East depriving the West of this critical stabilizing
asset from our financial system.

I have attached summary slides from my corporate presentation profiling the
global gold market. [Editor's Note: Slides are in this PDF file: Corporate
Presentation]. Please note that during 2013, which was a year of unprecedented
global physical gold demand with the largest refineries reporting gold supply
disruptions, the manipulation of the price of gold reached the point that gold
is now priced at 75% of the total cost of production of the major global gold
miners and additional gold supply will be withdrawn from market by these miners
due to this diseconomy.

Prime Minister Cameron, I would like to close with a re-emphasis of the importance
of this matter, your central responsibility for addressing this matter, and
the limited time that you have to act to avert financial system crisis.

David Jensen, P.Eng., LL.B., MBA, is a Professional Engineer with a degree
in Engineering from the University of Waterloo in Canada (1987). He worked
through 1993 on the F-5 Fighter Overhaul program and the Bombardier Regional
Jet programs. Mr. Jensen then graduated with a LL.B. degree in corporate and
commercial law from the University of Calgary (1997) and an MBA from Univ.
of B.C., majoring in Logistics and Supply Chain Management (1999). Returning
first to aviation then, after reading Austrian School Economics, Mr. Jensen
transitioned to the mining industry from the aerospace industry in 2004 first
through his mining industry consultancy, then as Vice President of Corporate
Development for Western Copper Corp., and most recently as President and COO
of Skyline Gold. Mr. Jensen currently serves as President and COO of a private
mining company and provides strategic, operational, risk assessment, and precious
metals consulting services through his consultancy, Jensen Strategic.